Do you Want to be a Voluntary or Involuntary Philanthropist?

You might not have given this question much thought in choosing which fundraisers to attend or which charities to select for end-of-the-year donations. The choice is easy to make, dependent upon the attractiveness of the event and whether the cause meets your particular interests.

But what happens when you are no longer here to make these personal choices? Only voluntary philanthropists decide who will benefit from their estate.

Those who do not plan ahead become involuntary philanthropists. The taxes your estate pays, up to 50%, can go directly to the federal government. With charitable planning, some or all of the estate can be redirected to benefit organizations that you want to support.

To this end, there is an organization here in San Miguel that for more than 30 years has been ready to help.

The San Miguel Community Foundation (SMCF), established in 1976, is a fully transparent, tax-exempt, non-profit, charitable foundation under Section 501 (c) (3) of the IRS code in the U.S.

Founded as a pass-through to provide U.S. tax-deductible receipts for U.S. citizens contributing to qualified Mexican charities, SMCF is now much more than that. Because of the generous donations from people in the community, SMCF has been able to reach out in numerous ways to better the lives of our neighbors.

There are a number of strategies available to voluntary philanthropists. In some cases, through proper planning, you can pass on more of your net worth to the family, as well as favorite charities, while at the same time maintaining a life long income stream for yourself.

These charities may include outright gifts, bequests at death, charitable remainder trusts, charitable lead trusts, charitable gift annuities and life insurance.

Strategies may involve but are not limited to the following types of property: highly appreciated real estate, including businesses that can be sold to avoid capital gains taxes; large retirement accounts that will be heavily income and estate taxed at death; appreciated taxable securities; current residences; and, life insurance.

For example, many do not know that life insurance can be used to make significant gifts to worthwhile causes, with tax advantages to the donor.

A life settlement strategy can be used when an existing policy is no longer needed for its original intended purpose or an existing policy is in poor financial condition and continued premiums would be a financial burden. In this transaction, a policy can be sold on the secondary market for an amount above the net cash surrender value of the policy. Generally, policy holders 65 years or older who own a cash value type contract are candidates for this type of transaction. Proceeds can in many cases net far greater amounts than the existing net cash surrender values received when surrendering that same policy back to the existing insurance carrier.

The choice depends upon your wishes and your situation. Life insurance is a wonderful asset. Many people have found life insurance the ideal program for making a significant charitable gift, either during life or at death. There are tax advantages when you give to charitable organizations and other beneficiaries. It can serve as a retirement fund. It can provide “liquidity”.

Life insurance is generally paid promptly. It is not tied up in the administration of the estate. Unlike a will, life insurance is not a matter of public record. Proceeds can pass to SMCF in privacy, if desired.

SMCF can advise on customized solutions to meet your goals and assist with the transaction at no cost. Call 152-7447 and ask for Doug Bruce, SMCF’s treasurer.

As Norman MacEwan said “We make a living by what we get, but we make a life by what we give.”